The S&P 500 on Monday sold off to a 14-1/2 month low and closed sharply lower.

Stocks were undercut by fears that the FOMC at its Tue/Wed meeting might not only raise interest rates but might also signal that its rate-hike regime will continue unabated.

There was also weakness in insurance and health care stocks after a court ruling late last Friday jeopardized Obamacare by declaring key elements of the program unconstitutional. Stocks were also undercut by weak U.S. economic data with the -12.4 point decline in the U.S. Dec Empire manufacturing index to a 1-1/2 year low of 10.9 (weaker than expectations of -3.3 to 20.0).

There was also weakness in homebuilders after the U.S. Dec NAHB housing market index unexpectedly fell -4 to a 3-1/2 year low of 56, weaker than expectations of unchanged.

Stocks

U.S. futures are pointing to a slight recovery for Wall Street with the stock market on pace for its worst December since the Great Depression. Aside from signs of slowing growth around the world, drama is setting in as the FOMC begins its two-day meeting on interest rate policy. President Trump took aim again yesterday, stating it was "incredible that with a very strong dollar, virtually no inflation and the outside world blowing up around us... the Fed is even considering yet another rate hike."

Qualcomm believes Apple remains in violation of a Chinese court's orders to stop selling older iPhones (NASDAQ:AAPL) despite a software update the tech giant pushed on Monday. "They are legally obligated to immediately cease sales... and prove compliance in court," said Don Rosenberg, Qualcomm's (NASDAQ:QCOM) general counsel. The case centers around patents on software features for switching between smartphone apps and resizing pictures before setting them as a wallpaper.

It's official! T-Mobile (NASDAQ:TMUS) and Sprint (NYSE:S) have won backing for their $26B merger from CFIUS, as well as the Justice Department, Department of Homeland Security, and Defense Department - collectively referred to as Team Telecom. Sources said the deal was cleared after the firms' respective foreign owners, Deutsche Telekom (OTCQX:DTEGY) and Japan's SoftBank (OTCPK:SFTBY), offered to stop using equipment from Huawei Technologies.

Twitter plunged 6.8% on Monday after disclosing that one of its support forms exposed user data to IP addresses in China and Saudi Arabia. Twitter (NYSE:TWTR) said it couldn't confirm whether the IPs were linked to state actors, according to its blog post disclosing the leak. The company was also called out by the Senate Select Committee on Intelligence for its role in spreading misinformation by Russian actors around the 2016 U.S. presidential election.

Les Moonves will not receive his $120M severance package after the CBS board of directors concluded that the CEO violated company policy and was uncooperative with an investigation into sexual misconduct. The decision caps the downfall of one of television's most influential figures after a dozen women came forward with allegations. CBS's stock has fallen sharply this year, declining nearly 20% since the start of 2018.

Defense roundup... General Dynamics (NYSE:GD) has warned Canada's government that it would incur "billions of dollars of liability" by unilaterally scrapping an agreement to sell armored vehicles to Saudi Arabia. Prime Minister Justin Trudeau has said he was looking for a way out of the deal after the killing of Jamal Khashoggi. Meanwhile, Japan plans to spend about $10B to become the largest customer outside the U.S. for Lockheed Martin’s (NYSE:LMT) F-35, adding 105 jets to its existing order.

Elaborating on its earlier charges against Goldman Sachs (NYSE:GS), the Malaysian government said the bank made untrue statements and omitted key facts in offering circulars for the securities it sold for state fund 1MDB. Goldman has consistently denied wrongdoing and maintains that certain members of the former Malaysian government and 1MDB lied regarding the proceeds of the bond sales.

North and South American markets finished mixed as of the most recent closing prices. The Bovespa gained 0.24%, while Mexico's IPC was off 2.35%. Shares in U.S. were unchanged with the S&P 500 at 2,546.16.

European Markets/Indexes December 18, 2018

European stocks are up +0.02% as they gave up most of their gains after German Dec IFO business fell more than expected to a 2-year low.

The German Dec IFO business climate fell-1.0 to a 2-year low of 101.0, weaker than expectations of -0.3 to 101.7.

Economy

Private bankers at Credit Suisse are advising clients to consider moving assets out of the U.K. before a rescheduled Brexit deal vote takes place in parliament, FT reports. There are fears of both a no-deal Brexit and the possibility of a leftwing party being elected. Labour leader Jeremy Corbyn has floated a "wealth tax" in a previous manifesto.

"Pre-Christmas delights are not to be expected," declared Ifo chief Clemens Fuest, as German business morale fell for the fourth straight month. Ifo's business climate index slipped to 101.0 in December, the lowest level in more than two years. Trade frictions, risks linked to Brexit, anti-government protests in France and weaker growth in emerging markets are all putting the brakes on a nine-year upswing in Europe’s economic powerhouse.

Stocks

It's official! T-Mobile (NASDAQ:TMUS) and Sprint (NYSE:S) have won backing for their $26B merger from CFIUS, as well as the Justice Department, Department of Homeland Security, and Defense Department - collectively referred to as Team Telecom. Sources said the deal was cleared after the firms' respective foreign owners, Deutsche Telekom (OTCQX:DTEGY) and Japan's SoftBank (OTCPK:SFTBY), offered to stop using equipment from Huawei Technologies.

As tensions simmer over the future of their alliance, Nissan's (OTCPK:NSANY) CEO reportedly plans to meet one-on-one with the deputy CEO of Renault (OTCPK:RNLSY) in Amsterdam this week. The meeting would be the first face-to-face interaction between the two automakers since Chairman Carlos Ghosn was arrested on Nov. 19. It would take place alongside regular monthly talks between the partners and Mitsubishi (OTC:MMTOY).

European Indexes - After Market December 18, 2018

European markets finished broadly lower today with shares in London leading the region. The FTSE 100 is down 1.06% while France's CAC 40 is off 0.95% and Germany's DAX is lower by 0.29%.

Asian Markets/Indexes December 18, 2018

Asian stocks settled mostly lower.

China's Shanghai Composite fell to a 2-week low on negative carry-over from Monday's plunge in U.S. equity markets along with a keynote speech by Chinese President Xi Jinping to mark China's 40th anniversary of the Reform and Opening Up campaign that offered no fresh commitments to open up or stimulate China's economy.

Economy

Coal consumption is expanding after two years of decline, but miners should brace for another period of sluggish growth. According to the IEA, global coal demand will inch up by just over 1% between 2017 and 2023, as growth in India and other Asian countries offsets a decline in Europe and the U.S. While developed nations are ditching the fossil fuel, emerging economies are using coal to quickly scale up electric power generation.

"No one is in a position to dictate to the Chinese people what should or should not be done," President Xi Jinping said in an address commemorating the 40th anniversary of the opening up of the Chinese economy. While he didn't mention trade tensions, he touched on the rapid growth of coastal cities, joining the WTO, the Belt and Road initiative, establishment of free trade zones and the country's first import expo.

China cut its holdings of U.S. Treasurys - by $12.5B in October - for a fifth consecutive month, amid a broader decline in foreign demand for U.S. government debt due to a strong dollar. Beijing's Treasury appetite has garnered attention due to its continued trade dispute with Washington, which has contributed to the renminbi falling toward the RMB7 threshold vs. the greenback for the first time since the financial crisis.

Stocks

Twitter plunged 6.8% on Monday after disclosing that one of its support forms exposed user data to IP addresses in China and Saudi Arabia. Twitter (NYSE:TWTR) said it couldn't confirm whether the IPs were linked to state actors, according to its blog post disclosing the leak. The company was also called out by the Senate Select Committee on Intelligence for its role in spreading misinformation by Russian actors around the 2016 U.S. presidential election.

As tensions simmer over the future of their alliance, Nissan's (OTCPK:NSANY) CEO reportedly plans to meet one-on-one with the deputy CEO of Renault (OTCPK:RNLSY) in Amsterdam this week. The meeting would be the first face-to-face interaction between the two automakers since Chairman Carlos Ghosn was arrested on Nov. 19. It would take place alongside regular monthly talks between the partners and Mitsubishi (OTC:MMTOY).

Defense roundup... General Dynamics (NYSE:GD) has warned Canada's government that it would incur "billions of dollars of liability" by unilaterally scrapping an agreement to sell armored vehicles to Saudi Arabia. Prime Minister Justin Trudeau has said he was looking for a way out of the deal after the killing of Jamal Khashoggi. Meanwhile, Japan plans to spend about $10B to become the largest customer outside the U.S. for Lockheed Martin’s (NYSE:LMT) F-35, adding 105 jets to its existing order.

Asian Indexes December 18th - After Market

Asian markets finished broadly lower today with shares in Japan leading the region. The Nikkei 225 is down 1.82% while Hong Kong's Hang Seng is off 0.96% and China's Shanghai Composite is lower by 0.82%.